Indonesian cosmetic companies listed on the Indonesia Stock Exchange have not yet seen earnings gain momentum in the first quarter of 2016. Martina Berto is the only listed cosmetic producer that managed to post rising net sales and net profit in Q1-2016. Meanwhile, the two other cosmetic firms - Mustika Ratu and Mandom Indonesia - saw their net sales decline in the same period due to weak purchasing power and household consumption in Southeast Asia's largest economy. Moreover, cosmetic firms have been offering discounts in order to raise sales volumes.

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On 8 May 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as Indonesia's Q1-2016 gross domestic product (GDP) growth, April deflation, manufacturing activity, the labor market, unemployment, the automotive industry, and more.

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Efforts to raise people's purchasing power and household consumption in Indonesia will be key to push for higher economic growth in 2016. According to the latest data from Statistics Indonesia (BPS), Indonesia's gross domestic product (GDP) growth reached 4.92 percent (y/y) in the first quarter of 2016. Although this result failed to meet analysts' projections (which generally stood around 5 percent y/y), it was higher than the 4.73 percent (y/y) economic growth pace that was posted in the same quarter one year earlier.

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Even though Indonesia's Financial Services Authority (OJK) has been eager to encourage local banks to raise efficiency, banks' ratio of operating expenses to operating income (ROEOI) has in fact risen. For example, the ROEOI of Bank Rakyat Indonesia (BRI) rose 406 basis points from 68.04 percent in March 2015 to 72.10 percent in March 2016. BRI's Finance Director Haru Koesmahargyo said the bank's higher ROEOI is caused by the bank's rising non-performing loan (NPL) ratio. In Q1-2016 BRI's NPL ratio rose 20 basis points to 2.22 percent.

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